METRO MINING LIMITED — Interim / Quarterly Report 2013

Oct 29, 2013

2013 QUARTERLY REPORT September

Corporate details

METROCOAL LIMITED | ABN 45 117 763 443

Quarterly Activities Report For the period ended 30 September 2013

ASX CODE: MTE

Issued Capital (30/09/2013)

208,883,663 shares issued

6,000,000 Unlisted Directors’ Options

4,500,000 Unlisted management and employee options 6,250,000 Other Unlisted options

1,479 Shareholders

Top 20 Shareholders

Hold 70.98% of listed shares

Directors& Management

Mr Stephen Everett - Chairman Mr Andrew Gillies – Non-executive Director Mr Michael Hansel – Non-executive Director Mr John Haley – Alternate Director to Mr. Gillies Mr Lindsay Ward – Non-executive Director Mr Wang Dongping – Non-executive Director Mr Robert Finch – Alternate Director to Mr. Wang

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Mr Mike O’Brien – Chief Executive Officer Mr Theo Psaros – Chief Operating Officer Mr Neil Mackenzie-Forbes – Joint Venture General Manager Mr Nicholas Villa – Project Manager Mr Edward Radley – Geology Manager

Largest Shareholders

Metallica Minerals Limited 30.78% Dadi Engineering Development Group 22.62%

Cash Balance

As at 30 September 2013, MTE’s cash balance was approximately $9.7 million

MetroCoal MetroCoal Quarterly ReportQuarterly Report September 2013 December 2012

Highlightsfor the quarter

• On 25 September 2013 MetroCoal announced a proposal to merge with Cape Alumina Limited. The proposed merger will create a Queensland-based, diversified bulk commodities company with a portfolio of major bauxite and thermal coal projects which will provide resilience through commodity cycles.

• The 2013 Bundi exploration program was successfully completed and the geological model was updated.

• MetroCoal finished the quarter in a very strong cash position. Following a concerted effort to minimise cash spend MetroCoal held approximately $9.7 million.

Resources

MetroCoal Thermal Coal Resources & Reserves

		Resources(Mt)*	Resources(Mt)*	Resources(Mt)*	Reserves (Mt)*	Applicable JORC
	MTE Ownership
Project
		Indicated	Inferred	Total
Columboola	49%	94.7	1,618	1,712.7		2004
Goombi	49%	4.9	13.8	18.7	26.2	2004
Bundi (includes Juandah)¹	100%	296	1,705.6	2,001.6		2012
Dalby West	100%		520	520		2004
Norwood	100%		156	156		2004
TOTAL		395.6	4,013.4	4,409	26.2

¹ Refer ASX Release – Bundi Project Update – 24 October 2013

• Mt – Million tonnes

MetroCoal MetroCoal Quarterly ReportQuarterly Report September 2013 December 2012

Bundi Project

The September quarter saw the finalisation of the 2013 program for the Bundi Project. The exploration and evaluation activities provided data to update the geological model so that it includes the latest available structural and quality information. As a result, the Bundi Resource estimate tonnage has increased by 11% and including the Juandah Project has now reached 2 Billion tonnes of which 296Mt is Indicated and 1705Mt is Inferred based on the JORC 2012 Code.

In September 2013 Glencore Xstrata announced that they would not be proceeding in the short to medium term to develop their Wandoan Project. In light of this delay, and in order to preserve cash, MTE has suspended further operations in the field including the EIS and no longer intends to submit the mining lease application this year. The Company will review the timetable when there is further information on the start date of the Surat Basin Rail and when the overall coal market and coal price improves.

Figure 1 – Bundi Project Area

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MetroCoal MetroCoal Quarterly ReportQuarterly Report September 2013 December 2012

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Columboola Joint Venture

The Columboola exploration program is currently on hold. Further reviews of planned work are underway in light of the delays to SBR and uncertainty on the timing of rail and port expansion to the Port of Brisbane.

Corporate Activities

On 25 September 2013, MetroCoal announced a merger with Cape Alumina Limited. Bauxite is one of the few commodities with strong demand and increasing prices forecast. This positive outlook in the short and medium term is particularly attractive given coal’s current depressed market position. The signing of a Merger Implementation Agreement (MIA) takes advantage of bauxite’s favourable outlook by combining the two companies to create a diversified bauxite and thermal coal business with a staged development pipeline.

Significant benefits to shareholders of the merged entity include:

• Diversified asset base and risk profile spread across two bulk commodities; will provide increased resilience and a long-term future

• Strong pipeline of near-term (bauxite) and long-term (thermal coal) project developments

• Improved cash position of $12 million[1] to accelerate development of near-term bauxite projects in strong and growing global market

• Market capitalisation of over $28 million[2] with increased liquidity for shareholders

• JORC compliant resources of 202.4 million tonnes (Mt) of high-quality, Cape York, export-grade bauxite and 4.2 billion tonnes (Bt) of thermal coal in the Surat Basin

• Highly experienced leadership team

Key terms of the offer include:

• Merger to be implemented via a Scheme of Arrangement, subject to Cape Alumina shareholder and court approval

• MetroCoal to offer approximately 1.12 MetroCoal shares for every 1 Cape Alumina share

• MetroCoal to provide Cape Alumina with a $3 million convertible note to supplement Cape Alumina working capital to accelerate work on the Pisolite Hills project (with $1 million available on execution of the MIA and a further $2 million available subject to the approval of Cape Alumina shareholders)

• Major Cape Alumina shareholder Resource Capital Funds will convert its $5 million convertible note into Cape Alumina shares at 12 cents per share prior to the merger proceeding

• Cape Alumina Board unanimously recommends the proposal and intends to vote all shares they control in favour

• Merger is anticipated to be effective by late December 2013, pending necessary approvals.

1 Based on cash balances on 31 August 2013

2 Based on closing prices on Friday 20 September

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Figure 3 – MetroCoal’s Surat Basin Coal Tenements

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Competent Person Statement

With reference to resources in the MetroCoal Resource and Reserve table excluding Bundi and Juandah

The information in this Announcement that relates to the Compilation of existing data and Exploration Results is based on information compiled by Mr Ed Radley who is a Member of the Australian Institute of Mining and Metallurgy (MAusIMM) (Membership No 300512). Mr Ed Radley is a fulltime employee of MetroCoal Ltd, in the role of Geological Manager, Mr Ed Radley has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Ed Radley has consented in writing for inclusion in this announcement the matters based on the information in the form and context it appears.

With reference to the Bundi and Juandah resources in the MetroCoal Resource and Reserve table

The information in this Announcement that relates to the Compilation of existing data and Exploration Results is based on information compiled by Mr Ed Radley who is a Member of the Australian Institute of Mining and Metallurgy (MAusIMM) (Membership No 300512). Mr Ed Radley is a fulltime employee of MetroCoal Ltd, in the role of Geological Manager, Mr Ed Radley has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Ed Radley has consented in writing for inclusion in this announcement the matters based on the information in the form and context it appears.

REGISTERED OFFICE

Cnr. Lytton Road and Stafford St, East Brisbane QLD 4169 GPO Box 122 Brisbane QLD 4001

T (07) 3249 3040 F (07) 3249 3041

MetroCoal MetroCoal Quarterly ReportQuarterly Report September 2013 December 2012